A MULTI-OBJECTIVE OPTIMIZATION

FOR GREEN SUPPLY CHAIN NETWORK DESIGN

Reviewed by DANANG KISWORO / 10074073

Introduction
Operations in supply chain and logistics are part of todays most important economic activities as they remain to be vital tools for businesses to remain competitive. Transportation activities are significant sources of air pollution and greenhouse gas emissions, with the former known to have harmful effects on human health and the latter responsible for global warming. The researcher are motivated to study a green supply chain network design problem where an initial investment on environmental protection equipment or techniques should be determined in the design phase. This investment can influence the environmental indicators in operations phase.

Literature Review
According to the most recent comprehensive review on GrSCM by Srivastava (2007), two types of greenness are considered by researchers: green design for products (Kuo et al. 2001) and green operations. The supply chain network design problem is usually modeled as a single objective problem (Melkote and Daskin (2001) and Santoso et al. (2005)). Multi-objective optimization is a widely used in variety of areas (Sabri and Beamon, 2000; MaxShen et al. 2005; Hu et al. 2009; Koksalan and Tuncer, 2009; Ou Yang et al. 2009). and is also used to embed into a multitude of decision support system (Despotis and Derpanis 2008; Gao et al. 2009; Stummer et al. 2009).

Methodology
(1/7)

1. Problem Definition
Supply Chain Network G =(N,A) N is the set of Nodes A is the set of Arcs N composed by the set of Suppliers S, facilities F and customer C N=SFC When given demand forecasting, we not only aim to choose the potential suppliers from suppliers set and decide which facility to open and finally consider how to distribute the product, but also consider the CO2 emission in each process of the whole network.

Methodology
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2. Modeling
Parameter : Parameter : Parameter : Parameter : Setup Cost for Facility j Environmental Investment in Facility jHandling cost forpproduct p in facility j Transport cost for product from facility i to j

Decision Variable : Decision Variable : Decision Variable : Decision Variable : 1, if facility j is open environment protection level flow of product p from nodenode j the flow in facility j p from node i to i to node j of product

Total Cost =

Fixed Setup Cost

Environmental Protection Investment

Total Transportation Cost

Handling Cost

Parameter : Parameter : CO2 emission in facility j for handling product p Environmental Investment in Facility j

Decision Variable : Decision Variable : flow of product p from node i to node j environment protection level in facility j the

Total CO2 Emission =

CO2 Emission in all Facilities

CO2 Emission from Supplier to facility and how to transport it

Methodology
(3/7)

2. Solving Approach
Parameter : Parameter : Parameter : Transport cost for product Setup Cost forifor jproduct p in facility j p from facility Facility j Handling cost to

Decision Variable : Decision Variable : Decision Variable : 1, flow of product p from node i to is selected if to node j flow of product p from node ienvironment protection level l node j

Total Cost =

Total Transportation Cost

Fixed Setup Cost

+ Handling Cost

Parameter : Fixed environmental investment and per unit Parameter : Environmental influence in facility j under lEnvironmental Investment in Facility j environmental level

Total CO2 Emission =

Decision Variable : Decision Variable : Amount of product p handling in facility j unt\der the environment protection level in facility j CO2 Emission from Supplier l environmental protection level

CO2 Emission in all Facilities

to facility and how to transport it

Methodology
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Solving Approach
It is well-known that there exist multiple nondominated solutions for a multi-objective optimization problem. Those solutions are called Pareto optimal solutions. In this paper, our objective is to obtain a Pareto frontier which provides evenly distributed Pareto solutions and it is convenient for decision maker to select a suitable configuration. In this paper, it is important to obtain a well distributed Pareto frontier as we are investigating how different parameters influence the decision making behavior and we are aim to provide an effective decision support tool for industry.

Methodology
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3. Computational Experiments
The problem is solved by the normalized normal constraint method and it is implemented by Microsoft Visual C++ 6.0, and each sub-problem is solved by ILOG CPLEX 9.0 solver subroutine.
Consider the Six-node network shown. There are 3 Supplier and 2 product. Each arc is associated with transportation cost and an amount of CO2 Emission.
The decision maker should determine: (1) Where to set up the facility ? (2) How to set environmental protection level ? (3) Which suppliers should be selected for each facility? (4) How products are transported ?

Methodology
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Scenario A : Set the max CO2 Emission 16600

Methodology
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Scenario B : Set the max CO2 Emission 12000

Result
(1/3)
If the Capacity Ratio is increase, it will effect to decrease Cost and CO2 Emission.
Definition of Capacity ratio is network capacity over the total demand. Why larger capacity ratio exhibit lower total cost and lower CO2 Emission? Because when the demand increases, the network provides more flexibility to conduct logistic cost and CO2 Emission in Transportation Process.

Capacity Ratio = 1 Total Cost =7300, CO2 = 2300 Capacity Ratio = 1.2 Total Cost = 7000, CO2 = 2150

Result
(2/3)
If the Supply Range is Increase, it will effect to decrease Total Cost and CO2 Emission. Supply range means supplier range include the distance and the number of supplier. Why larger supply range exhibit lower total cost and lower CO2 Emission? Because if the company has close supplier and rich facilities, we can reduce C02 Emission and transportation cost.
Facility X

Supplier

X+2

Facility

Supply Range = [1,1.2] Total Cost =7300, CO2 = 2310 Supply Range = [1.5,2] Total Cost = 7180, CO2 = 2280
Facility
X Supplier X-2 Facility Supplier After : Total Cost and CO2 Emission 2x-2 Before : Total Cost and CO2 Emission 2x+2

Result
(3/3)
If the Demand is Increase, it will not effect to decrease CO2 Emission significantly. But if the Demand is increase, it will make greater profit, and this profit can consider to investing more in environmental protection such as purchase equipment or technology.

Methodology
(2/7)

2. Modeling
Parameter : Parameter : Parameter : Parameter : Setup Cost for Facility j Environmental Investment in Facility jHandling cost forpproduct p in facility j Transport cost for product from facility i to j

Decision Variable : Decision Variable : Decision Variable : Decision Variable : 1, if facility j is open environment protection level flow of product p from nodenode j the flow in facility j p from node i to i to node j of product

Total Cost =

Fixed Setup Cost

Environmental Protection Investment

Total Transportation Cost

Handling Cost

Parameter : Parameter : CO2 emission in facility j for handling product p Environmental Investment in Facility j

Decision Variable : Decision Variable : flow of product p from node i to node j environment protection level in facility j the

Total CO2 Emission =

CO2 Emission in all Facilities

CO2 Emission from Supplier to facility and how to transport it

Methodology
(3/7)

2. Solving Approach
Parameter : Parameter : Parameter : Transport cost for product Setup Cost forifor jproduct p in facility j p from facility Facility j Handling cost to

Decision Variable : Decision Variable : Decision Variable : 1, flow of product p from node i to is selected if to node j flow of product p from node ienvironment protection level l node j

Total Cost =

Total Transportation Cost

Fixed Setup Cost

+ Handling Cost

Parameter : Parameter : CO2 emission in facility j for handling product p Environmental Investment in Facility j

Decision Variable : flow of product p from node i to node j

Decision Variable : the environment protection level in facility j

Total CO2 Emission =

CO2 Emission in all Facilities

CO2 Emission from Supplier to facility and how to transport it